American Financial Group, Inc. (NYSE/NASDAQ: AFG) today released preliminary
results of its periodic review of its closed block of long-term care
insurance, including the impact of the previously announced external actuarial
study. Preliminary results indicate the Company will be required to record an
after-tax charge of $80 to $100 million ($0.88 to $1.09 per diluted common
share) to write off deferred acquisition costs and strengthen reserves on this
block of business. This charge is primarily due to lower projected future
investment rates resulting from the continued low interest rate environment
and assumes no material change in the interest rate environment between now
and when full year 2012 results are announced. This charge will be excluded
from core net operating earnings. As a result, AFG reaffirmed its previously
announced 2012 core net operating earnings guidance of $3.10 to $3.30 per
share.

The charge also reflects changes in claims, expense and persistency
assumptions, including the impact of data from the external study, which
supplemented the Company's internal analysis of claim experience relative to
broader industry trends. After the charge, the Company expects that its
long-term care subsidiaries will continue to remain adequately capitalized and
will not require a capital contribution from AFG.

Full year core net operating earnings will include the results of the review
(“unlocking”) of major actuarial assumptions, including investment rates, on
the Company's annuity business. Preliminary results indicate this review will
result in an after-tax charge of less than $15 million ($0.16 per diluted
common share), which is reflected in the earnings guidance above.

Final results of both the long-term care periodic review and the annuity DAC
unlocking will be included in the announcement of full year 2012 results to be
issued in January 2013.